If you've done a little reading and learning about Social Security, you may know that a key strategy for making your benefit checks as hefty as possible is to delay starting to collect those benefits. The longer you delay, up to age 70, the bigger they'll get.
That's certainly appealing, and it's an excellent reason to delay, but there are still circumstances in which it's best to just start collecting your benefits well before age 70. Here's a look at those.
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You may simply need to collect Social Security early
You can start collecting your Social Security benefits as early as age 62. But the age at which you can collect the full benefits to which you're entitled, based on your earnings history, is your "full retirement age," which is 66, 67, or somewhere in between. Starting to collect your Social Security benefits before you reach your full retirement age will make your checks smaller -- though, of course, you'll be receiving many more of them.
Most people actually do start collecting their benefits early -- typically at age 62 or 63 -- and there are some very good reasons for doing so. Arguably the best reason to start collecting early is because you simply have to.
You may just not have enough money to live on, once you're in your early 60s -- perhaps due to a job loss or health setback or what-have-you. Many, many people don't have enough socked away to live on in retirement. According to the 2021 Retirement Confidence Survey, only 72% of workers surveyed reported having saved anything for retirement, meaning that 28% have not done so.
Even among those who have saved, the news isn't all good. According to the 2022 Retirement Confidence Survey, 34% of workers report that the total value of their savings and investments, excluding the value of their primary home, is less than $25,000 -- and, worse, a whopping 19% (roughly one in five people) have less than $1,000 saved.
So if you just need that money, start collecting it.
Another reason to start collecting early is if there's a decent chance that you won't live a longer-than-average life. If you're not in good health, or have many relatives who died in their 60s or 70s, you may get more money out of Social Security, in total, by starting early.
But if you can wait...
Those are excellent reasons to start collecting Social Security benefits early, but there are also good reasons to delay, if you can. For example:
- If there's a decent chance that you'll live a longer-than-average life, delaying in order to get fatter checks can help you get more, in total, out of Social Security.
- Social Security benefits get cost-of-living adjustments (COLAs) regularly, to keep up with inflation to some degree. The bigger your initial benefit, the bigger your increases will be.
- If you're married and have been the higher earner over your working life, delaying to maximize your benefit is a good strategy to help your spouse. If you die first, your spouse will get to start collecting your larger benefit checks instead of their own smaller ones.
For many people, delaying starting to collect as long as possible is the smartest move. But many people don't have that luxury.
The decision of when to start collecting benefits requires some thought. Learn more about Social Security and think about what kind of timing will serve you (and your spouse, if you're married) best. Be sure to take some time to craft a solid retirement plan, too, because Social Security isn't likely to provide enough to live on. The average monthly retirement benefit was recently only $1,671 -- or about $20,000 annually.
